The National Association for Environmental Management (NAEM) is the largest professional association for corporate environment, health and safety (EHS) and sustainability decision-makers. We are dedicated to empowering our members to advance environmental stewardship, create safe and healthy workplaces, and promote global sustainability.

The Green Metrics that Matter

March 2012

The demand for corporate transparency continues to grow, yet there is a need for greater alignment between the data used to evaluate a company’s sustainability performance, and the metrics companies track internally. Learn who the key research players are, what firms track internally and why, and recommendations for the external research process going forward.

Overview

NAEM's "Green Metrics that Matter" research initiative is about helping corporations meet the demand for corporate transparency. In this section you will find:

Background: Read about the genesis for the research.

Research Timeline: Understand the successive phases of the Green Metrics that Matter initiative.

Reports: Download published results from the first three phases of NAEM's Green Metrics that Matter research

The explosion of environmental, social, and governance (ESG) ratings firms and rankings has generated tremendous public attention and discussion about which metrics are predictive measures of strong EHS and sustainability management programs.

The increasing focus by business leaders, Wall Street, environmental NGOs, and policy makers to evaluate a company based on its EHS and sustainability performance demonstrates the critical importance of these issues in 21st century business management. As the demand for information has grown, however, several issues have emerged that may be inhibiting more widespread transparency among publicly-held U.S. corporations:

Internal Resources: Companies are understandably struggling to keep up with the flood of research requests. This challenge is especially prevalent among publicly-held U.S. corporations, where the task primarily falls to the corporate EHS manager.

Lack of Transparency: Research firms do not typically disclose their methodology, the algorithms they use to derive ESG rankings, or their business partnerships.

Questions about Relevancy: Lengthy surveys have led many corporate leaders to question how certain data points are relevant to their analysis, and whether this data even accurately reflects strong environment, health and safety (EHS) and sustainability management within a company.

Need for Standards: There is a strong sense among companies that there needs to be greater standardization of the ESG reporting process, including explaining and validating data.

Unclear Value of Participation: While leadership companies recognize the value of stakeholder engagement, it's often unclear whether participation with ESG surveys advances this goal. There is also limited understanding of who the requesting entities are, who the audience for the ESG information and the explicit benefits of participation.

In the fall of 2010, the National Association for Environmental Management (NAEM) launched its ‘Green Metrics that Matter' initiative as a way to understand and begin to address these issues for its members. The first phase was an audit of the ESG research landscape.

The second phase was an in-depth survey of what companies track and why. Heretofore, the conversation about what defines a ‘sustainable' company had been driven by external entities; this research was the first to successfully document how leadership companies define and manage sustainability metrics internally. The third phase was a stakeholder dialogue between corporate leaders and ESG researchers to identify recommendations for the research process going forward.

Research Timeline

Green Metrics that Matter Research Timeline

Phase I: Audit of the ESG research landscape

Purpose: To understand what EHS/ESG data external entities request, what products they create and how the data is used.

Purpose: To understand how companies are responding to external requests for EHS/ESG data; to identify which EHS/ESG data companies track and report metrics internally; and to understand the use and value of EHS/ESG data within companies.

Methodology: Quantitative survey of 75 members of the National Association for Environmental Management (NAEM)

Timing: September 2010 and May 2011

Phase III: Measuring Corporate Sustainability Stakeholder Dialogue

Purpose: To discuss the challenges of ESG research from the perspective of business leaders, research analysts and the investment community; to identify recommendations for improving the ESG research process and the value of ESG data.

Format: One day stakeholder dialogue with presentations by, and attendees representing, members of the NAEM Board of Regents, leading ESG research firms and Investor Relations professionals.

Timing: May 2011

Phase IV: Identifying a Common Set of Green Metrics that Matter

Purpose: To identify a set of metrics that are meaningful to both senior corporate decision-makers and investors; to identify potential gaps and understand why they exist

Methodology: Collect and map the data that ESG firms collect. Compare metrics with the results of Phase II of the Green Metrics that Matter. (These results will be supplemented by qualitative interviews with members of the NAEM Board of Regents.

Timing: 2012 (forthcoming)

Reports

Phase I: Audit of the ESG research landscape
Understand what EHS/ESG data external entities request, what products they create and how the data is used.

Phase II: Identifying Corporate EHS and Sustainability Metrics: What Companies are Tracking and Why
Learn which metrics leadership companies track and report internally and which metrics make it to the C-Suite.

Phase III: Measuring Corporate Sustainability Stakeholder Dialogue
Find out the challenges of ESG research from the perspective of business leaders, research analysts and the investment community and see their recommendations for improving the ESG research process.

Today the National Association for Environmental Management (NAEM) announced they are partnering with the Center for Retail Compliance (CRC) to encourage knowledge-sharing about best practices in environmental compliance.

NAEM's 2017 EHS&S Software Buyers Guide report reveals that 'Working to provide Greater External Transparency' is among the top reasons why companies are shopping for commercial software to track environment, health and safety and sustainability performance. The expectation for external transparency about environment, health and safety, and sustainability (EHS&S) performance is driving more companies to the commercial software market, according to a research report released today by the National Association for Environmental Management (NAEM).